Disaster Tax Rules Don't Apply For BP Oil Spill Claims (Not classified as a disaster)

[kpete]

Source: WDSU

Tax Experts: BP Claims Taxed At Highest Rate
Disaster Tax Rules Don't Apply For BP Oil Spill Claims

POSTED: 10:25 pm CST January 3, 2011
UPDATED: 11:30 pm CST January 3, 2011

NEW ORLEANS -- Tax experts said Monday that since the Deepwater Horizon oil spill was not classified as a disaster, BP claims might be taxed at the highest rate.

Disaster tax rules do not apply, so tax experts said they are warning people, especially those who received compensation from BP, to be prepared for the tax that they need to pay in the coming weeks.

CPA Ted Stacey said, "If you were paid for lost wages or income, that's going to be ordinary income that is taxed at the highest rate you pay. It could be as high as 35 percent for federal or 5 percent state."

Many people might get shocked at what they owe the government, but 20-year-old Kyle Kikuchi, a busboy who received $2,500 from BP for lost wages, said he's prepared.



Read more: http://www.wdsu.com/money/26359230/detail.html

[dixiegrrrrl]

1. Kick 'em whle they are down.

THAT is another layer of criminality.
And WHY was the spill NOT declared a disaster?

[BladesOfAiur]

2. Awww..Why would you want tom kick POOR, POOR BP?

Tony Hayward just wanted his life back! :sarcasm:

:mad: ASSHOLES!

[dipsydoodle]

3. Surely whether or not it was declared a disaster

would've been up to your own Administration - not BP on whom that issue didn't have any bearing. It follows that any layer of criminality must also refer to your Administration.

Aside from that - BP would've had no vested interest whatsoever in the tax implications of payouts given that they agreed to the Escrow fund and then left things be.

edit to add : "didn't have any bearing" refers to classification only : not BP's responsibilities.

[social_critic]

6. Possibly because the disaster didn't impact people that much

I believe a disaster involves total destruction of homes, etc. When people are compensated for lost wages, and the compensation is gross - this means the BP fund pays the gross losses - then it's evident the payee has to pay income tax. It's also evident the payee will pay taxes at whatever rate the law says he/she should pay.

I don't see what's the big deal, people who did lose wages have been compensated. If they had made their wages they would have had to pay their taxes, therefore if the wages are made up, then the government is entitled to tax them. What's the matter, are you guys a bunch of Republicans who think nobody should pay taxes?

[TheMadMonk]

7. Well where I come from wage relief is usually capped at about 80%...

...of normal income. So if I'm reading this correctly. These people will be paying MORE tax than they would normally pay on LESS income than they would normally receive.

And last time I saw something on the compensation funds, IIRC the self employed were unable to get compensation for lost income at all, and bugger all compensation for anything else. What's the betting that what little they have received is now going to be classed as income to be taxed at the highest rate?

On the other hand, a company that already games the system to pay as close to zero taxes as possible, will almost certainly be permitted to claim their spending on cleaning up their mess, (including quite possibly into this fund) as a tax deductible expense and put in for a tax credit with every expectation of receiving it.


If you can't see the big deal in that, I'm sure FR can make a place for you.

[Javaman]

4. See it's like this...

there were not big explosions, oh wait, there was that first one, but after that, no homes wrecked, oh wait, unless you count all the people out of work because of the spill, no images of people crying on the news, oh wait, there were those interviews with the local fishermen who were very upset at the destruction, and there was no one killed, oh wait, let's not talk about the 11 who died.

it's just peaceful calm ocean with millions of dying creatures below it's waves, oh wait, what about the pelicans or the wet lands or the crab and shrimp beds...

Nothing to see here folks, more bullshit and mirrors brought to you by the good people at big oil lobbying inc.

we are a sad society.

[AlbertCat]

5. It could be as high as 35 percent for federal

Who's gonna pay that?


Tax Bracket Married Filing Jointly Single
15% Bracket $0 – $70,040 $0 – $35,020
28% Bracket $70,040 – $141,419 $35,020 – $84,872
31% Bracket $141,419 – $215,528 $84,872 – $177,006
36% Bracket $215,528 – $384,860 $177,006 – $384,860
39.6% Bracket Over $384,860 Over $384,860